Kayne Anderson Buys $1.3B Medical Office Building Loan Portfolio

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Kayne Anderson Real Estate, the real estate investment arm of Kayne Anderson Capital Advisors, has acquired from Synovus Bank a $1.3 billion medical office loan portfolio.

The purchase was made through the company’s debt platform, KARED, launched in 2015 and which has closed on more than $11 billion since. JLL Capital Markets represented Synovus Bank in the transaction.

The 13 million-rentable-square-foot portfolio spans 33 states and includes 106 floating-rate mortgages secured by 308 medical office building assets. The properties, sponsored by blue-chip institutional investors, are 92.3 percent leased on a long-term basis with an average remaining lease term of nine years and 35 percent of them are anchored by hospitals.

Since its founding in 2007, Kayne Anderson Real Estate has amounted a portfolio of assets under management valued at $14 billion and has completed more than $24 billion of gross investments across its equity and debt strategies. The company’s target sectors include medical office buildings, student and senior housing, as well as attainable housing. With this recent acquisition, the company’s focus is on diversifying its portfolio and scaling its platform, according to prepared remarks from Al Rabil, co-founder & CEO of Kayne Anderson Real Estate.

KA Real Estate has acquired some 25 million square feet of medical office space that spans 579 properties across 41 states since 2013. The company’s involvement in health-care real estate is strongly tied to its partnership with Remedy Medical Properties.

In the last couple of years, the two companies made several significant purchases through a joint venture. In early 2022, Remedy Medical Properties, Kayne Anderson Real Estate and MedProperties Realty Advisors LLC formed a $350 million-plus partnership to recapitalize a 23-asset health-care real estate portfolio that encompasses more than 1 million square feet, spread across 11 states.

The partnership kicked off 2023 with another deal, that included the acquisition of Project Prism, a collection of 13 medical office properties in eight states, totaling 300,328 square feet. Montecito Medical Real Estate sold that portfolio for $131 million.

 

Source: Commercial Property Executive

When Will Medical Office Building Sales Bounce Back?

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On the surface, the current state of the medical office building (MOB) investment market is about as slow as it’s been for years, maybe decades.

However, as is typically the case with a complex, robust industry like HRE, there is much more going on than meets the eye.

The InterFace Healthcare Real Estate conference investment panel included (from left to right): John Fry, SVP- Acquisitions, Rendina Healthcare Real Estate; Ryan Crowley, SVP, Investments, Healthcare Realty; Alex Bell, Partner, Catalyst Healthcare Real Estate; Eric Lee, Managing Director Medical & Life Sciences, Berkadia Real Estate Advisors LLC; Chris Morgan, Senior Manager, Investments, Big Sky Medical; and the moderator, Andy Dow, Shareholder, Member of Board of Directors and Chair, Real Estate Industry Group, of Winstead PC. (PHOTO CREDIT: HREI)

“The first half of the year volume was down … anywhere from 66 to 71 percent versus the first half of 2022,” said Andy Dow, an attorney with a focus on healthcare real estate (HRE) and the chair of the Real Estate Industry Group with Dallas-based Winstead PC. “The (second quarter) volume was roughly $1.2 billion, which was the lowest quarterly volume ever recorded by RevistaMed (an HRE data and research firm) since it was founded in 2015.”

So when will it bounce back?  Probably not before the elections of 2024, according to the InterFace Healthcare Real Estate panel.

 

Source: HREI

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Demand For Healthcare Real Estate Investment Trusts To Get Boost

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U.S. healthcare real estate investment trusts recorded solid performance in the second quarter, with average funds from operations and same-store net operating income up 20.3% and 8.1%, respectively, year over year, according to a new report from Nareit.

Nareit is the US-based trade association for REITs and publicly traded real estate companies.

The sector is expected to continue performing well due to demand tailwinds such as the aging population in the country. In just over a decade, for the first time in U.S.history, people aged at least 65 years are expected to outnumber those under the age of 18, according to U.S. Census Bureau projections.

Healthcare REITs, which own senior living communities, hospitals, medical office buildings and skilled nursing facilities, comprise 8% of equity market capitalization as of the end of August.

The sector’s share in the FTSE Nareit All Equity REIT Index stood at 4.5%, surpassing the office sector’s share, the report said.

 

Source: S&P Global